Summary

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​Gail Miller is the guardian and conservator for her son, Ryan, who suffered severe and permanent injuries in a vehicle rollover accident. The vehicle was owned by Ryan’s father and insured by Citizens Insurance Company. After Citizens denied Ryan’s application for no-fault benefits in November 2007, Miller hired an attorney. On December 13, 2007, the lawyer contacted Rehabilitation Institute of Michigan, where Ryan had recently begun inpatient treatment, to ask for billing information. RIM, which is owned by the Detroit Medical Center, did not prepare its bill until Ryan was discharged in January 2008; his treatment charges ultimately totaled about $150,000. DMC did not send a lien notice to Citizens in December 2007 and did not contact Citizens at that time.

On December 17, 2007, Miller sued Citizens. In a letter dated January 17, 2008, Miller’s attorney advised DMC that he had filed suit on Ryan’s behalf; he requested Ryan’s medical bills and asked to discuss the matter. According to DMC, this was its first notice that Miller’s attorney intended to assert a claim against Citizens for RIM’s services to Ryan, assistance that DMC never requested from the attorney.

On January 22, 2008, the lawsuit was settled, with Citizens agreeing to pay all of Ryan’s no-fault benefits; Miller agreed not to seek a penalty or attorney fees that were available under the no-fault act. The trial court ordered Miller to notify Ryan’s health care providers of a conference on February 11, 2008, to settle attorney liens. On January 22, Miller’s attorney talked with Jane Ruppman, RIM’s director of patient business services. The attorney advised her that he secured insurance coverage from Citizens and that he wanted one-third of DMC’s outstanding balance as a fee. Ruppman received the same information and fee request in a January 24 letter from Miller’s attorneys. The letter also stated that RIM should appear in court on February 11 if it wished to contest the fee claim.

After Ryan was discharged in January 2008, RIM billed Citizens on February 2 or February 12; Citizens denied payment. At the February 11 conference, counsel for DMC argued that DMC did not receive notice of the litigation until after it was settled. The circuit judge ordered an evidentiary hearing in March regarding DMC’s objection and ordered Citizens to pay all other providers subject to an attorney lien of one-third of their bills. In October 2008, the circuit judge ruled that DMC knew that Citizens had denied coverage, knew that Miller’s attorneys were pursuing claims against Citizens, did not ask the attorneys to cease work on DMC’s behalf, and did not bring in its own counsel or file a lien. Accordingly, the trial court ruled, Miller’s attorneys were entitled to a fee out of the payment due from Citizens to DMC. The judge eventually directed Citizens to issue a check to DMC in the amount of $102,506.94 and to issue a check to Miller and her attorneys for $48,153.77.

DMC appealed to the Court of Appeals, arguing that Miller’s attorneys were not entitled to a fee from DMC. If DMC was obligated to pay a fee, the amount should be based on hours worked and a reasonable rate, and not pursuant to a contingency fee agreement that DMC was not a party to, DMC contended. Miller cross-appealed, disputing the amount of payment that DMC received. The Court of Appeals affirmed in a published opinion. Among other things, the Court of Appeals held that the attorney fee was appropriate under the “common fund” exception to the American rule that parties are responsible for their own attorney fees, and that Miller’s attorneys had a “charging lien” against the settlement proceeds obtained through their efforts. DMC appeals.